Budget 2021: Textile industry welcomes setting up 7 mega textiles park

The textile industry welcomed the setting up of 7 mega textiles parks proposed in the Union Budget 2021-22, saying this will make the industry globally competitive, but the imposition of a 10 per cent basic customs duty (BCD) on raw cotton will increase the domestic prices.

"The Mega Investment Textiles Parks (MITRA), under which seven textile parks will be established over a period of three years, is a positive step that will enable the industry to become globally competitive, attract large investments and boost employment generation," Cotton Textiles Export Promotion Council (TEXPROCIL) Chairman Manoj Patodia said.

He stated that the Budget has proposed to reduce the basic customs duty on caprolactam, nylon chips and nylon fiber and yarn to 5 per cent, which will encourage the growth of the Man Made Fibre (MMF) sector especially the MSMEs.

 

However, Patodia expressed his concern over the imposition of 10 per cent BCD on raw cotton, which will make imports of extra-long staple cotton costly, especially Giza Cotton from Egypt and Supima Cotton from the US.

The TEXPROCIL chairman also said the imposition of import duty on cotton will increase the domestic prices.

Clothing Manufacturers Association of India (CMAI) President Rajesh Masand also said the 7 mega textiles parks were the highlight of the Budget directly impacting the textile industry.

This is in line with the government's intention to encourage mega projects and increase the scale of operations in the textile industry, he said. The incorporation of the plug-and-play model will enable the members of such parks to avoid huge capital expenditure outlays.

Masand also said lack of scale has been the bane of our efforts to increase the industry's share in the global trade, especially in the apparel sector.

"However, the government also has to closely study why the textile parks have not really succeeded in the past. It is crucial to avoid errors of omission and commissions in the past.

"Otherwise, this will remain one more well-intended scheme, which fails to lift the fortunes of the textile industry," he added.

Masand also said the increase of import duty on cotton and cotton fibre has come at a time when the industry is reeling from an unprecedented increase of raw material prices especially yarn and could send a wrong signal.

Crisil Research Director (Textiles) Hetal Gandhi said setting up of 7 mega textile parks will aid Indian textile exporters to improve global competitiveness against countries like Vietnam and Bangladesh by providing access to sophisticated infrastructure and facilities.

"India's share in RMG (readymade garments) exports to the US and the EU remained almost stable at 4-6 per cent, while that of competitors improved during the last 5 years," she added.

Gandhi said that setting up of textile parks along with the production-linked incentive scheme for technical textile and MMF producers will help apparel exporters to enhance export share in global markets in the medium term.

Icra Senior Vice-President and Group Head (Corporate Sector Ratings) Jayanta Roy said that by addressing some of the existing infrastructural and cost inefficiencies, which the domestic players face, this could enable India to garner a larger pie of the global apparel trade.

The Union Budget 2021 has announced a Mega Textile Investment Scheme, which aims to create global champions in exports by establishing seven textile parks across the country, with plug-and-play facilities, he noted.

"The announcement comes at an opportune time, as sizable opportunities are available in the global markets, owing to increasing focus on diversifying the vendor base beyond China," he added.

Welspun India Joint Managing Director and CEO Dipali Goenka said the Budget is encouraging and growth-oriented and supports the achievement of the 'Aatmanirbhar Bharat' vision, and fuels post-pandemic recovery.

"We foresee revival of consumer confidence with the budget impetus on inclusive human capital development, infrastructure development and universal healthcare," she said.

Goenka added that announcement for setting up of 7 textile parks in the next 3 years, in addition to the recent PLI scheme for technical textiles and manmade fibers, promises to strengthen the global leadership of Indian textiles.

"The Budget proves to be a strong enabler of women empowerment in the country, with the measures announced by Finance Minister Nirmala Sitharaman that promote women working in night shifts across all sectors, with adequate safety," she added.